FINANCIAL RESULTS PRESENTATION ON 24 NOVEMBER 2014 MR VILAKAZI: Good morning. It’s that time of the year again where it gives us pleasure to welcome you to the Netcare presentation of the annual results. I would like to specifically also welcome my colleagues from the Board that are with us this morning and welcome the management team. We have the executive directors as well as the rest of the EXCO with us and others in the management team. In particular I want to acknowledge our Group CEO, who is going to make the presentation. The Board is very excited about the results that are being presented to you today. Keith Gibson, the CFO, and the heads of the different divisions, Jacques du Plessis the MD of the hospital division which as you will see from the results are very strong. We have the heads of the other divisions, the primary healthcare division, Prime Cure and Medicross. We’ve got the head of the Netcare 911 and we also have National Renal Care also here and all the other divisions and the directors that are here. We welcome you. In particular I want to welcome those that would be joining us in the UK via podcast. Especially we welcome the new CEO, Mrs Watts, who’s the new CEO of GHG as we announced earlier this year and will also be joining or is joining the board of Netcare Limited here in South Africa as well as the team in the UK is welcome as they’re joining us via the podcast. Ladies and gentlemen, we are very excited as I’ve just indicated once more to present these good results and also results whose achievements is due to the team that we have not just at head office under the leadership of the CEO, Dr Richard Friedland, but also our ordinary thousands of employees throughout the country who contribute on a day to day basis in ensuring that we receive these results. It is also our pleasure that as we also declare dividends we do not only declare dividends to yourselves as shareholders, shareholders that are outside here, but also our employees are part of our strong shareholder base and it is therefore not surprising that in the last five years we have continued to be the leading top empowered company in our sector and we have retained once more again this year level 2 black, broad-based black economic empowerment level. Without any much waste of time I want to call upon the chief executive officer who’s going to present to us the results and then we’ll continue. Thereafter he will hand over to the CFO. DR FRIEDLAND: Thank you. Thank you very much, Jerry. Good morning, ladies and gentlemen, and a warm welcome to all of those joining us on the live webcast. I want to echo at the outset what our chairman said and extend my personal gratitude and deep appreciation to our executive teams, our management teams and all of our staff across our various networks in South Africa, in the United Kingdom and Lesotho. We’re able to present these results today because we stand on the shoulders of your very hard efforts and incredible achievements. Thank you. I’m going to take you through a brief overview of our performance in the United Kingdom (UK) and in South Africa and then delve into some detail in South Africa and the UK before handing over to our chief financial officer, Keith Gibson, who will dissect the numbers in more detail and present the outlook for the 2015 financial year. Just a reminder of the types of services we provide across our three geographies and more specifically of the comprehensive nature of services we provide in South Africa from hospitals to primary care to pre-hospital emergency services, to retail pharmacies, to renal dialysis and also training. We’re the largest trainer of nurses and paramedics in the private sector in South Africa and as you can see from this slide we trained over 3 400 nurses this year and almost 500 paramedics. In terms of South Africa we’ve had a very strong demand for healthcare in South Africa. We focused on rationalising the business and on operational efficiencies but we remain very committed to quality outcomes and driving sustainability within Netcare and growth is a key priority for us. In the United Kingdom the economy continues to recover. This has yet to filter through into the private medical insurance market. I’m pleased to say that a lot of the distraction and the uncertainty around the Competition Commission inquiry in the UK is now something of the past and our management teams have really been able to focus on this business for the last six months. Jerry
mentioned the appointment of Jill Watts. She began last week as the new CEO of GHG. We’re delighted that Jill has joined us and is also on the Netcare Board. She comes with enormous experience, having been the former CEO of Ramsay Healthcare in the United Kingdom. And whilst this past year or so we focused on quality and driving operational efficiencies within GHG we are very confident that Jill will be able to drive a very strong growth agenda going forward for General Healthcare. So translating this into our overall numbers, revenue rose by 16.1% for the year to R31.8 billion. You can see from the bar chart the relative contribution from South Africa and the United Kingdom, and the UK’s contribution somewhat flattered by a weaker Rand currency. EBITDA rose 18.3% and pleasingly, at an adjusted headline earnings per share, up 19.5%. You can see that the UK are now beginning to contribute 4% of those earnings and as a consequence of these results the Netcare Board was able to declare a final dividend of 48.0 cents, 18.5% up on last year, with a total dividend for the year of 80.0 cents. Whilst the focus of today is on our financial results and numbers, everything we do in our organisation is underpinned by a commitment to quality and specifically the Triple Aim objectives of trying and striving to provide the best possible experience for our patients, the best possible clinical outcomes in the most cost-effective manner. And I’m very pleased to say that across our three geographies we’ve been able to achieve ratings from our patients and their families of between 85 and 90%. In terms of outcomes we’ve been able to virtually eradicate central line intravenous infections in our organisation and significantly reduce ventilator-associated pneumonia. In terms of providing cost-effective healthcare, 35% of the patients we treat in the United Kingdom are NHS patients at a national tariff, and importantly we’re able to exceed the very stringent quality measures imposed on us by the NHS. Earlier this year we spoke about antibiotic stewardship, a programme we’ve been rolling out over the last three years in our hospitals, aimed at ensuring the rational use of antibiotics. Over the past year this has translated into a 23% reduction in antibiotic costs across our network. Within the organisation we continually measure and drive ourselves in terms of governance and driving sustainability, and in this past year Netcare was named as one of the top six performers on the JSE Social Responsibility Investment Index out of 157 companies that participated. We’re also part of the Dow Jones Sustainability Index for emerging markets, and in terms of their world index we participate in the carbon and water disclosure programmes and became a signatory to the UN Global Compact. Now, turning to South Africa in some more detail, broadly as a Group and then dissecting into hospitals and primary care divisions, we’ve had a very strong performance across all of these divisions as evidenced by the numbers. We’ve seen increased capacity utilisation and a standout feature has been excellent operating leverage. You’ll be aware that the Competition Commission launched an inquiry into the private healthcare sector earlier this year. They called for submissions from all stakeholders and we made very substantial submissions at the end of October. Turning to the numbers, importantly we were able to translate a 7.4% rise in revenue into a 13.5% rise in EBITDA demonstrating really outstanding leverage within the hospitals and the emergency services division. As a result you can see EBITDA margins now widening by 120 basis points in South Africa and operating profit margins rising by 130 basis points. Looking at the hospitals more specifically, growth in this division has been largely organic. I’m pleased to say that our full week occupancy has now increased to 68.9%. This is up by 1.5%. I mentioned a number of the efficiency measures we already have in place. We only commissioned 89 new beds this year, 11 in the first half and 78 in the second half, mainly in August and September. We converted 65 beds to high demand
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